Advance/Newhouse Agrees to Discovery Consolidation

John Malone Finally Consolidates Ownership of Discovery Communications’ Cable Networks

Cable tycoon John Malone got his long-thwarted wish of consolidating ownership of Discovery Communications’ cable networks when Advance/Newhouse Communications signed a definitive agreement Wednesday to combine its one-third stake.

The development has been under discussion for some time.

At the end of a multistep process, the Discovery cable networks will be united in what is described as a new publicly traded company, Discovery Communications. Currently, the separate Discovery Holding, which Malone leads, owns 66 2/3% of the Discovery TV channels.

The deal needs various approvals and is expected to wrap sometime in the third quarter.

Once Advance/Newhouse adds its one-third stake in the new Discovery Communications, the entity will be a pure-play cable-network business as 100% owner of Discovery Channel and Animal Planet. Basic-cable networks are hot on Wall Street.

As part of the deal, the current holding company will spin off stock from its creative-services outfit, Ascent Media Group, to existing shareholders, which separates that struggling business from Discovery.

The power players remain in place as former Discovery CEO and current board member John Hendricks will be chairman of the new company and David Zaslav will be the CEO.

Advance/Newhouse will get three board seats on the new company and the right to approve certain transactions at the new company.